…but where to start. Putting together a budget, cashflow, financial forecast (or whatever you wish to call it) for your business can be daunting at first.
The best place to start is with the things that are certain. These can be different for each business but your business overheads are usually easy to identify. Examples include rent, insurance, administrative staff costs and the like. If you are not sure, have a look at your previous years profit and loss statement, it may not be 100% accurate for the next 12 months but it is a place to start.
Income is often more difficult to predict, but that’s no reason not to try! Use your historical data as a starting point and make some assumptions for the next few months. Your ‘cost of goods sold’ (if you have any) can be calculated as a percentage of sales, again based on historical data. This is where your accountant can help. Use your accountant to explain anything you don’t understand on your profit and loss statement and also to assist you with annual trends…and don’t forget any capital expenditure ie the purchase of assets.
Soon you will have a projected net profit for your business for the next 12 months of trade and this is where it gets interesting. Have you calculated a profit or a loss! Don’t despair if the figures don’t look as good as you had hoped – your financial information can now be fine-tuned to match your goals and targets can be set.
Get serious about your business goals and talk to your accountant today about your financial forecasts.